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I wasn’t really a part of the economy in the 80’s, but I do seem to remember getting some kick ass savings rates for the filthy lucre stowed away in my junior savings account. Young me, didn’t realize at the time that to get those 15% returns on a savings account what the banks had to be charging on the loans they made.
With jobership and homeownership and adultship all having occurred – I’m more than a little concerned about an upward trend in the prime interest rate, because things that are affordable at 3%ish interest become much more untenable at 15 or 20% interest.
“The Federal Reserve raised its benchmark overnight interest rate by a quarter of a percentage point, which means that the folks who borrow from the Fed (which is kind of like the Bank of Canada, and whose customers are other lenders) will now pay in a range from 0.75 per cent to 1 per cent.
Up until Wednesday, the range was as low as 0.5 per cent.
A quarter of a percentage point? Doesn’t sound like much, so no wonder the announcement got overwhelmed by everything else.
Consider this: the Fed’s rate is now double what it is in Canada. It’s very difficult to believe that the decision there will not have a ripple effect that will eventually hit Canadian mortgages and lending rates — and along with them, people who’ve never lived and owed when rates suddenly jack up.
Fed chair Janet Yellen raised interest rates this week, for only the third time since the financial crisis nine years ago. (Reuters)
But let’s think about the decision, which is only — believe it or not — the third time that the Fed has ever raised a rate since the financial crisis that engulfed the world in 2008. (It is, on the other hand, the second hike in three months.)
On the upside, the hike is generally perceived to be an indication of growing strength and optimism in the American marketplace.
“The simple message,” said Fed chair Janet Yellen, who is expected to step down within a year, “is the economy is doing well.”
But what many people in the finance world are expecting is more of the same; that is, more hikes. Another is expected in June, and the Washington Post used the words “more frequent” to describe what the Fed’s hikes will be like from now on.
The purpose of a rate hike, especially while rates have been (when you think about it) remarkably tiny is to keep inflation in check.
But the other side of that coin is what higher rates can do to ordinary consumers, including those on this side of the border.
Rates are a fraction of what they once were
This is where my head has been lately.
It seems to be we’ve had a full generation of consumers that don’t know the piercing agony that comes when interest rates are high, or who might be inclined to believe that what they’re paying now on, say, their credit card bill is high enough.
Moreover, these consumers may not appreciate to what extent that lending rates have, for almost a decade, have been artificially low. (I’m tempted to call them politically low, too, in light of the 2008 crisis.)
What would higher interest rates mean for homeowners, and small businesses? In a tight economy, they could be tricky. (Submitted by Kara O’Keefe)
Now, some history, both provincial and personal: In the early Eighties, interest rates were not just in the double digits, they were above 20 per cent. The recession that came with it was harsh, deep and sweeping in its destruction.
The local impact was crushing, perhaps because there was an ebullient feeling in the wake of the 1979 Hibernia discovery. In 1988, a few years before he died, St. John’s businessman Andrew Crosbie reflected on the wicked boom and bust of the early Eighties.
“We certainly got caught — but I don’t know if it was in the oil euphoria rather than the interest rate euphoria” that caused so much damage to businesses like his own.”
The idea of being ‘caught’ and forced to make unsavoury financial decisions isn’t particularly appealing – and having one’s future rest on the ‘market’ is distinctly unsettling. :/
We can change society in the (sociological) blink of an eye. Unfortunately, it is usually in service of making a buck. Highlights from JSTOR’s public section.
“For caffeine addicts, a morning without a pot of coffee is a no-go. But it hasn’t always been as convenient to make coffee as it is today—and as Rebecca K. Shrum writes, the dawn of coffee machines came along with a massive dose of manly marketing.
Mr. Coffee, the first electric-drip coffee machine for home use, debuted in 1972, forever changing the way Americans made coffee. Before its rise, women used percolators to brew their coffee on the stovetop or on the counter—a method that produced bitter, scorched coffee. Despite the availability of complicated, non-electric drip systems, percolators ruled American kitchens.
[…]
Mr. Coffee looked and worked differently than percolators. It also made better coffee. Since it automated the superior drip coffee technique, it gave even groggy consumers the chance for a good cup. It was also dramatically more expensive than a percolator.
In a bid to get consumers to give up their familiar percolators for this expensive new product, Mr. Coffee included something unexpected in its marketing: men. Not only was it given a masculine name, writes Shrum, but its marketing suggested that it would produce a man’s preferred brew. The company hired Joe DiMaggio to give his masculine endorsement to the product—adding an additional layer of masculine advice to a product that purported to teach women how to make a better brew.
But Mr. Coffee did more than mansplain. It played into stereotypes of men as arbiters of coffee quality, and encouraged men to get into the kitchen themselves. Since it was so easy to use, men no longer had an excuse to cede coffee-making to their wives. This corresponded with women’s increased entry into the workforce and helped men contribute more to their households.
Today, the thought of a man unwilling to brew a pot of coffee (or so upset about his coffee’s quality that he abuses his wife) seems preposterous. Mr. Coffee changed those cultural expectations, even as it played into existing stereotypes about gender and domesticity.”
Class based analysis of the system is what is required in order to raise consciousness so the work can be done to change the ground rules that are making a hot mess of things .
“A now-retired colleague of Marxist persuasion once remarked on what he saw as a telling omission on the part of many academics who study inequality. He observed that while everyone agrees that racism and sexism are wrong and should be eradicated, few people make the same argument about class. “Why is it imperative to oppose racism and sexism,” he asked, “and not class?” Between us, it was mostly a rhetorical question. We knew that the answer had to do with academics’ class privilege and need to embrace an ideology of meritocracy to justify that privilege. To call class into question would be to question not just a system of inequality but our own deservingness.
While social scientists certainly haven’t ignored class, the attention we’ve paid to it usually takes one of two forms: using class as a variable to predict the attitudes or behaviors of individuals; or studying the lives of people in certain class categories (e.g., ethnographic studies of working-class communities). Such studies can be useful for showing how people experience and are affected by their class locations. What’s typically missing, however, is analysis of how the class system works—how it is used by those who control the means of production and administration—to generate and maintain the inequalities that shape people’s lives.
Part of the problem is that some of the conceptual language useful for unpacking these matters has been stigmatized. The language exists but using it carries a high risk of being dismissed as an ideologue. To speak of a growing gap between productivity and wages over the last thirty years is acceptable. To speak of wage stagnation as a partial result of declining union membership is okay. To speak of ever more wealth accruing to the richest 1% is now within respectable bounds. But to speak of an increasing rate of expropriation enabled by capitalist victories in the class struggle is to invite trouble. Or invisibility.
This is not just a matter of how class is talked about in academic circles. How we study, talk about, and write about class has wider consequences. Focusing solely on diversity, inclusion, privilege, and mobility means having little to contribute when it comes to challenging capitalist power, advancing working-class interests, or transforming capitalism as a whole. It means, in effect, accepting a soft ringside seat.”
by Michael Schwalbe (writing in Counterpunch).
I’m currently reading a book called Weapons of Math Destruction, inside Cathy O’Neil details how ‘Big Data’ (via the use of opaque algorithms) is increasing inequality and threatening democracy in the industrialized world.
About half-way done and the sad word of the day that I’ve learned from the book is this –
This untidy word in question is “Clopening” and is defined as this: When an employee works late on night to close down the store or cafe and then returns a few hours later, opening it again. It makes logistical sense for a company, but leads to sleep deprived workers and crazy schedules.
Oh, and another term – “Churn” – the negative costs associated with hiring for and training a new person in a position. Churn speaks directly to the company’s bottom line and thus is a large input factor into many HR related algorithms.
Terminology aside, let’s take a look at the central idea of the chapter called ‘Sweating Bullets”:
“Scheduling software can be seen as an extension of the just-in-time economy. But instead of lawn mower blades or cell phone screens showing up right on cue, it’s people who badly need money. And because the need money so desperately, the companies can bend their lives to the dictates of a mathematical model.
[…]
The trouble, from the employee’s perspective, is an oversupply of low-wage labour. People are hungry for work, which is why so many of them cling to jobs that pay barely eight dollars per hour. This oversupply, along with the scarcity of labour unions, leaves works practically with no bargaining power. This means the big retailers and restaurants can twist workers’ lives to ever-more-absurd schedules without suffering excessive churn. They make more money while their workers’ lives grow hellish. And because these optimization programs are everywhere, the workers know all too well that changing jobs isn’t likely to improve their lot. Taken together, these dynamics provide corporations with something close to a captive workforce.
I’m sure it will come as no surprise that I consider scheduling software one of the more appalling WMD’s (weapons of math destruction). It’s massive, as we’ve discussed, and it takes advantage of people who are already struggling to make ends meet. What’s more, it is entirely opaque. Workers often don’t have a clue about when they’ll be called to work. They are summoned by an arbitrary program.
Scheduling software also creates a poisonous feedback loop. Consider Jannette Navarro. Her haphazard scheduling made it impossible for her to return
to school, which dampened her employment prospects and kept her in the oversupplied pool of low-wage workers. The long and irregular hours also make it hard for workers to organize or to protest for better conditions. Instead, they face heightened anxiety and sleep deprivation, which causes dramatic mood swings and is responsible for an estimated 13% of highway deaths. Worse yet, since the software is designed to save companies money, it often limits workers’ hours to fewer than thirty per week, so that they are not eligible for company health insurance. And with their chaotic schedules, most find it impossible to make time for a second job. It’s almost as if the software were designed expressly to punish low-wage workers and keep them down.
The software also condemns a large percentage of our children to grow up without routines. They experience their mother bleary eyed at breakfast, or hurrying out the door without dinner, or arguing with her mother about who can take care of them on Sunday morning. This chaotic life affects children deeply. According to a study by the Economic Policy Institute, an advocacy group, “Young children and adolescents of parents working unpredictable schedules or outside daytime working hours are more likely to have inferior cognition and behavioural outcomes.”
-Cathy O’Neil. Weapons of Math Destruction p. 128 – 129
I look at the grossly unfair conditions these people are facing and can see the self-perpetuating cycles that are being established. I thank the many heavens that I have a profession that keeps me out of this particularly cruel circle of horror. Unionized, and organized through my work, through my collectively bargained contracts I can count on stable work hours and a reasonable compensation. This condition of relative comfort seems far out of reach for so many people who are no less deserving than I – a stable means to live an raise a family are not unreasonable demands to make- but the Precariate’s humble demands are dismissed and ground down with the help of these WMD that perpetuate, codify, and bring to fruition the crippling inequality in our societies.
The push for unionization must always be kept at the forefront of any progressive movement, because left to their own machinations, corporations will exploit people and society for their own selfish ends.
A reminder, that the more egalitarian a society is, the better off it is for both the poor *and* the rich.
Happy Lemmings Day! a.k.a Black Friday
Should we besmirch this plucky rodent’s escutcheon by associating Lemmings as the embodiment of greed and feral-consumerism known to a good chunk of the western world as ‘Black Friday’? It isn’t really fair (hey, just like capitalism) to play on the misunderstood ‘suicidal tendencies’ of the much maligned lemming. For the record:
“Lemmings have become the subject of a widely popular misconception that they commit mass suicide when they migrate, by jumping off cliffs. It is in fact not a mass suicide but the result of their migratory behavior. Driven by strong biological urges, some species of lemmings may migrate in large groups when population density becomes too great. Lemmings can swim and may choose to cross a body of water in search of a new habitat. In such cases, many may drown if the body of water is so wide as to stretch their physical capability to the limit. This fact, combined with the unexplained fluctuations in the population of Norwegian lemmings, gave rise to the misconception.[6]“
The answer, dear friends, is of course we should – appropriating and exploiting nature is a zesty analog for capitalism and the consumer culture that feeds the satanic mills that are grinding our planet into dust. (Not enough sleep and too much coffee during this particular writing stint.)
It’s hard to believe, but sometimes your dear host finds it necessary to perch upon a perfectly precarious high horse in order to dispense the needed wisdom to the unwashed massess, the hoi polloi, the basket of deplorables, et cetera. I remember making a post about Black Friday expressing my disgust with scenes that seem to happen around this time of year.
As noted in the video above – we’re still mired in this terrible consumerist extravaganza. The problem is that, I’m not disgusted, but rather saddened by the whole, often gory, spectacle. The lengths people will go to, to get stuff, that they think will bring them happiness in their life.
Their association of “happiness = stuff” is no mere coincidence, but rather the endgame of a society, while drunk on capitalism, that measures success, status, and happiness with the amount of material goods acquired. Of course, the needs are manufactured (followed by the goods to meet those ‘needs’) so that the prospect of new shiny baubles will be the next ‘true’ indicator of having ‘made it’ in life. The process of chasing after material goods in the vainglorious pursuit of happiness is a nasty positive feedback loop that reduces citizens in a democratic state to mere consumers always hungry for their next fix and thus justifying the exploitative system that feeds them their drug.
I can’t help thinking that if we had a guaranteed minimum income and housing for everyone people might start to stray from the consumption paradigm. People might start renewing connections with others and engaging in pursuits that they actually want to do instead of what they have to do in their struggle to avoid the depredations of abject poverty.
We’ve lost reverence for the security and connectedness a strong community provides – and it is only way back from the abyss that we continue to create for ourselves.
Make no mistake – capitalism in its current incarnation requires the exploitation of people and resources to make it work. Exploiting people and natural resources inevitably leads to war (see Iraq for instance) and this in this zeal for feeding our doom-systems we often forget that eventually
Start with lemmings and end with Lord of the Rings references, you’ll only see it here at DWR (for better or worse).
The points of view put forward here represent the thinking of an individual that does not believe in the political process, and one that believes that change can come from inside the process. Fascinating stuff.
CHRIS HEDGES: Well, that’s precisely what we’re trying to do. There is a point where you have to—do I want to keep quoting Ralph?—but where you have to draw a line in the sand. And that’s part of the problem with the left, is we haven’t.
I covered the war in Yugoslavia, and I find many parallels between what’s happening in the United States and what happened with the breakdown of Yugoslavia. What is it that caused this country to disintegrate? It wasn’t ancient ethnic hatreds. It was the economic meltdown of Yugoslavia and a bankrupt liberal establishment that, after the death of Tito, until 1989 or 1990, spoke in the language of democracy, but proved ineffectual in terms of dealing with the plight of working men and women who were cast out of state factories, huge unemployment and, finally, hyperinflation.
And the fact is that these neoliberal policies, which the Democratic Party is one of the engines for, have created this right-wing fascialism. You can go back—this proto-fascism. You can go back and look at the Weimar, and it—Republic—was very much the same. So it’s completely counterintuitive. Of course I find Trump a vile and disturbing and disgusting figure, but I don’t believe that voting for the Democratic establishment—and remember that this—the two insurgencies, both within the Republican Party and the—were against figures like Hillary Clinton, who spoke in that traditional feel-your-pain language of liberalism, while assiduously serving corporate power and selling out working men and women. And they see through the con, they see through the game.
I don’t actually think Bernie Sanders educated the public. In fact, Bernie Sanders spoke for the first time as a political candidate about the reality the public was experiencing, because even Barack Obama, in his State of the Union address, was talking about economic recovery, and everything was wonderful, and people know that it’s not. And when you dispossess—
ROBERT REICH: Well, let me—let me—
CHRIS HEDGES: Let me just finish. Let me finish. When you dispossess that segment, as large as we have—half the country now lives in virtual poverty—and you continue to essentially run a government that’s been seized by a cabal, in this case, corporate, which uses all of the machinery of government for their own enrichment and their own further empowerment at the expense of the rest of the citizenry, people finally react. And that is how you get fascism. That is what history has told us. And to sit by—every time, Robert, you speak, you do exactly what Trump does, which is fear, fear, fear, fear, fear. And the fact that we are going to build some kind of—
ROBERT REICH: Well, let me—let me try to—
CHRIS HEDGES: —amorphous movement after Hillary Clinton—it’s just not they way it works.
ROBERT REICH: Let me try to inject—let me—let me try to inject—
AMY GOODMAN: Former Clinton Labor Secretary Robert Reich?
ROBERT REICH: Let me try to inject some hope in here, in this discussion, rather than fear. I’ve been traveling around the country for the last two years, trying to talk to tea partiers and conservatives and many people who are probably going to vote for Donald Trump, to try to understand what it is that they are doing and how they view America and why they’re acting in ways that are so obviously against their self-interest, both economic self-interest and other self-interest. And here’s the interesting thing I found.
This great antiestablishment wave that is occurring both on the left and the right has a great overlap, if you will, and that overlap is a deep contempt for what many people on the right are calling crony capitalism—in fact, many people on the left have called crony capitalism. And those people on the right, many, many working people, they’re not all white. Many of them are. Many of them are working-class. Many of them have suffered from trade and technological displacement and a government that is really turning its back on them, they feel—and to some extent, they’re right. Many of them feel as angry about the current system and about corporate welfare and about big money in politics as many of us on the progressive side do.
Now, if it is possible to have a multiracial, multiethnic coalition of the bottom 90 percent that is ready to fight to get big money out of politics, for more equality, for a system that is not rigged against average working people, where there are not going to be all of these redistributions upward from those of us who have paychecks—and we don’t even realize that larger and larger portions of those paychecks are going to big industries, conglomerates, concentrated industries that have great market power, because it’s all hidden from view—well, the more coalition building we can do, from right to left, multiethnic, multiracial, left and right, to build a movement to take back our economy and to take back our democracy, that is—
[…]
CHRIS HEDGES: I don’t think it makes any difference. The TPP is going to go through, whether it’s Donald Trump or Hillary Clinton. Endless war is going to be continued, whether it’s Trump or Clinton. We’re not going to get our privacy back, whether it’s under Clinton or Trump. The idea that, at this point, the figure in the executive branch exercises that much power, given the power of the war industry and Wall Street, is a myth. The fact is—
Can a compromised system produce results that benefit the non-elite portions of society. I’m thinking no.
Well here we go, another lesson on how exploiting the poor is the goto plan for making the big bucks in our society, only lets give it a snappy title – the new sharing economy. Let’s look at how the new sharing economy looks a bunch like the old economy.
“A livery driver for a fleet owner in Boston was looking for a way to obtain his own car and drive for Uber, the popular ride-sharing service. He heard about a vehicle financing program Uber was promoting to drivers who, like him, had a poor credit history. Roger, who asked to use only his first name for business reasons, signed a lease in September with an Uber-referred lender for a brand new Chrysler minivan.
Now less than a year later, Roger says he is on the brink of bankruptcy while facing weekly payments of $450 for his car lease plus late fees.
Uber, with a head-spinning valuation of $50 billion, has become a dominant force in the passenger transportation industry in large part by luring more drivers to its platform than anyone else. In an effort to maintain that edge and expand its pool of self-employed drivers beyond those who already own a car, the company has been steering potential drivers with bad credit to subprime lenders whose leases lock borrowers into years of weekly payments at sky-high interest rates.
On its website and in promotional emails to current drivers, Uber promotes its vehicle solutions program with pitches right out of the subprime lending playbook. “Credit challenges? No problem. Get on the road in 2 days with $0 down,” reads Uber’s driver signup page.
One of Uber’s first subprime leasing partners was Santander Consumer USA, a subsidiary of the Spanish banking giant. The lender drew the attention of federal authorities in 2014 when the Department of Justice issued subpoenas to the company as part of an investigation into the subprime auto loan market. In February Santander agreed to pay $9.35 million in a settlement with the Justice Department for illegally repossessing more than 1,000 vehicles from active military personnel.”
Predatory capitalism mixed with the predatory lending. I’m not sure there is a more vile combination – well of course there is, see 2008 et al. – available in our economy presently.
“Roger Bertling, an attorney and Harvard Law School instructor who specializes in predatory lending, says these terms are bad even compared with those generally used with subprime borrowing. “That [lease] is as bad as any I’ve seen on the predatory lending level for autos,” he says of the Santander agreement. While borrowers with poor credit always face high interest rates, Bertling cites the automatic weekly payment deductions and restrictions against personal use of the vehicle as being unique in the subprime auto loan industry.
When asked about the ride-sharing and personal use restrictions, an Uber representative responded in writing that “it was not our intention to include this clause, and we worked with the lender to remove the clause once it was discovered. Our current lending partners do not include language of this nature.”
Others question the wisdom of offering unsecured car loans to those with poor credit in the first place. “There’s a reason why someone with a credit score of 300 can’t get a loan. The likelihood of them defaulting is so high,” says John Ulzheimer, a credit expert and president of consumer education at CreditSesame.com. “You could easily come up with scenarios where it’s a disaster waiting to happen.”
There’s a big incentive, however, for lenders to make these high risk loans. In a scenario reminiscent of the mortgage crisis that led to the Great Recession, there’s a big market on Wall Street for bundled subprime auto loans. In September 2013 a Santander bond sale of securitized subprime auto loans fetched $1.35 billion. A similar offering by the company last month brought in $712 million from investors.”
Ah, well if there is money to be made off the backs of the poor, desperate, and needy in our societies then why the hell not?
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